June 21, 2016
Volume 7 Issue 3
Pertamina Turns Focus Overseas
Pertamina became one of the world’s 30 largest lubricant companies by growing organically in its home market. Now the Indonesian company is turning to acquisitions and foreign countries as it aims to break into the top 15.
Officials with Pertamina Lubricants laid out that strategy in a June 10 press conference in Jakarta. In an interview last week, an official said the company is exploring possible acquisitions of lubricant companies in China, Malaysia and South Africa and expects to implement a number of collaborations or acquisitions by 2018.
“Everything is still in the study phase,” Operations Director Andria Nusa said. “We had talks with companies in China, though they cannot yet be named because it is still in the stage of study and analysis.”
Andria explained Pertamina Lubricants’ rationale for turning its focus overseas. “Sales growth for the domestic market will be small, about 2 to 3 percent. As for our overseas markets, we are just beginning and there are many opportunities and the potential for growth is still quite large in terms of market share.”
Pertamina expects a decline in lubricant demand in Indonesia this year following a weakening of the domestic oil and gas and mining sectors. In the automotive sector, lubricant sales are sluggish. Andria said Indonesians tend to use public transport more than private vehicles, and this has led to a slowdown in lubricant demand compared to previous years. “The lubricant market in the country is forecasted to remain stagnant in the next one to two years,” he said.
Against this domestic market backdrop, Pertamina believes the company has to expand overseas to increase revenues. “Currently our [global rank] is in the 20s, and we want to be the top 15 in the world. We cannot rely on organic growth of our existing market if we want to reach the top 15,” said Andria.
In December 2014, the company acquired Thai lubricant blender Amaco Production Co. to gain a foothold in the country. At the June 10 press conference, officials said that Amaco has started marketing the Pertamina brand of industrial lubricants for its local market and noted that Pertamina Lubricants has improved Amaco’s operational and financial performance.
“We are the leader in Indonesia, and are optimistic to become a world-class company by 2020,” said Arya Dwi Paramita, corporate secretary of Pertamina Lubricants.
Pertamina Lubricants claims to supply 59 percent of Indonesia’s lubricants and expects that share to increase to 60 percent by the end of the year, or 420,000 tons. “As of May 2016, total lubricants sales for both domestic and overseas markets increased from the previous year to 177,000 tons,” according to a press release distributed during the press conference.
“In 2015, Pertamina Lubricants recorded revenue of more than 9 trillion rupiah (U.S. $675 million), supported by revenue growths from the domestic automotive and industrial segments,” the company said. The company aims to increase revenue by about 10 percent to Rp 10 trillion this year.
Pertamina Lubricants is a subsidiary of state-owned energy company, PT Pertamina (Persero). In addition to base oil, it markets and manufactures automotive and industrial lubricants and has a total capacity of more than 473,000 tons per year. The company operates three blending plants in Gresik, Cilacap and Jakarta and one in Thailand.